Posted at 11.29.2018
The transportation company that we have chosen is AirAsia. AirAsia's principal activity is to provide air travel services. Since 2001, AirAsia has shattered the travel norms around the world and be the world's best flight. AirAsia has gained an award being successful & most low-cost flight in Asia. Which has a fleet of 72 aircraft, AirAsia flies to over 61 home and international places with 108 routes, and performs over 400 flights daily from centers in Malaysia, Thailand and Indonesia.
AirAsia is a very successful low priced carrier. In an exceedingly short time, it became a market head in the Asia region. AirAsia's main platform is the Low- Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Through the corporate philosophy of "Now Everyone Can Fly", AirAsia has become more popular and many people choosing Air Asia as their preferred selection of transport. AirAsia believes in the no-frills, hassle-free, low fare business theory can bring the business enterprise to very successful and seems that keeping costs low requires high efficiency in every area of the business.
Apart from the main activity of providing flight transportation service, AirAsia also mixed up in courier service which involves Delivery-to-Door (right to the specific vacation spot) and Airport-to-Airport two parts. The rates of such services are cheaper than other couriers by up to 50 percent cheap. It promises your courier with more value and cost savings. Customers can certainly usage of the service by only a few clicks in the AirAsia's website. It's very convenient, efficient and cost cutting down. Besides, customers can certainly track their consignment using the Yahoo Maps.
AirAsia was proven in 1993. Before 2001, AirAsia neglect to sufficiently stimulate the marketplace and get enough people from Malaysia Airlines in order to establish its own market. On 2 December 2001, as a result of inability of establishment, the flight was up to deal and purchased by Tony Fernandes's company Tune Air Sdn Bhd. Tony Fernandes then enrolled a few of the financing low-cost airline experts to restructure AirAsia's business model. He invited some experts to become listed on the exec team. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-frills operation with three B737 aeroplanes as a low-fare, low-cost local airline.
In 2003, AirAsia has recently become more attractive in its market demand, subsequently opened a second hub at Senai International Airport in Johor Bahru and launched its first international airfare to Bangkok. From then on, AirAsia began a Thai subsidiary, added Singapore itself to the destination list, and commenced plane tickets to Indonesia. Airasia commence to commence flight service in many other countries in the subsequent years.
In the year 2006, Low Cost Carrier Terminal (LCCT) was founded in Kuala Lumpur International Airport which cost the establishment charge of RM108 million which are designed for 10 million individuals a year. From then on, AirAsia has hedged 100% of its fuel requirements for another 3 years, achieves an aeroplanes turnaround time of 25 minutes, and has a team productivity level that is triple more than Malaysia Airlines. It achieves an average aircraft usage rate of 13 time per day.
AirAsia is currently the largest one customer of the Airbus A320. The company has placed an order of 175 devices of the same airplane to service its routes and at least 50 of these A320 will be operational by 2013. On 27 Dec 2006, Air Asia's CEO Tony Fernandes unveiled a five-year intend to further improve its occurrence in Asia. In the program, AirAsia will enhance and boost its route network by attaching all the existing cities in your community and expanding further into Indonesia, Southern China and India. Hence, with increase consistency and addition of new routes, AirAsia needs passenger volume to hit 18 million by the end of 2007. On 27 September 2008, AirAsia is wearing its list 106 new routes to be put into its current set of 60 over the next few years. The number of old routes discontinued is not publicly disclosed.
On 12 November 2008, AirAsia abolished petrol surcharges. In doing this, it claimed to be the 'first air travel on the globe to abolish petrol surcharges'. By May 2008, the airline had flown 55 million cumulative travellers. In 2010 2010, it gets the world's lowest charges for an air travel, at the pace of below 2 cents per seat per kilometer.
SWOT research is the blended analysis which examines the Advantages, Weaknesses, Opportunities and Hazards of one company. It is an essential analysis in a firm since it can identify the inner (power and weakness) and external (opportunities and risks) factor for a firm in order to accomplish their goals and aims hence to be low cost carrier company in airline industry. To reach your goals in the company management, a firm must consider the business's ability and how to combine it with inner and external factor. Main purpose of the evaluation is to identify the inner and exterior factor that AirAsia need to consider for 'low cost carrier' in aircraft industry.
The primary strength of AirAsia is the low cost innovator in Asia. The effectiveness of AirAsia is to maintain low cost; whereby they don't have to provide benefits to their workers, but nonetheless can maintain the best quality of these fleet. AirAsia has effectively created a "low-cost airline mentality" among their workforce. The workforce is very adaptable and high determined in making AirAsia the cheapest cost flight in Asia. AirAsia reduce its cost by attaining efficiency in every area of the business and keeping simplicity. Therefore every system process must combine the best industry tactics. The first thing for the low cost apply is the 'time idea'. Time is money. An air travel makes money when the airplane is flying, not when the airplane is parked. In order to maintain low cost, AirAsia must consider of high airplane utilization (which keep carefully the aircraft flying as much as possible) to minimize the time spending on the bottom.
Secondly, 'no frills' is the factor to accomplish low cost. AirAsia only provide those needs for his or her customer and decrease the pointless cost to be incurred in the fare of airline. For instance, The Company do not provide free food & drinks, free seats, ticketless airline are the activities excluded to be able to achieve a more competitive price by spending money on insignificant services. On the other hand, streamline operations that allow the process making as simple as possible is the main element of an effective low cost carrier.
The second durability of AirAsia is the wonderful utilization of Information Technology (IT). The Low Cost Carrier (LCC) is likely to expand quickly by bringing in more customers to become listed on the market thus increasing the degree of rivalry within the industry. The excellent utilization of IT have immediately contributed to their promotional activities, brand building exercise as well keep the cost down by enabling immediate purchase of seat tickets by consumer thus conserving on air travel agent fees. AirAsia was accepted for being the first airline on earth to introduce SMS and IVR arranging solutions to its guests to extend its arranging system. AirAsia widely utilizes the internet as a scheduling and payment route has kept them to be the best airline company in Asia. Its detailed website at (www. airasia. com), allows visitor to reserve and purchase seats, check airline flight schedules, and acquire information about the air travel. The website is so popular, that roughly 45% of AirAsia's business is done through internet sales. AirAsia became the first air travel on earth to give a multi-lingual website that will come in 6 dialects - English, Bahasa Malaysia, Mandarin, Tamil, Thai, and today Bahasa Indonesia. This is also one of the advantages of the company as the website is user-friendly as well as enabling company to concentrate on different market segment especially countries in Asia.
On the other hands, the management team of AirAsia is also very good in strategy formulation and execution. That is no doubt an essential power for Airasia as company strategy is the central element of your business. To reach your goals in their long terms objective and their business, AirAsia need to recognize their tactical management. Company can easily achieve their perspective and mission bottom on the nice management. With good management, company is required to be considered of its capacity. The power of the company can be integrated by the SWOT examination. Air travel industry is a distinctive and complex industry, thus without a good and right management, it's possible that AirAsia cannot be able to compete with the complicated business environment. AirAsia has a strong management team rather than only a 'general management'. The simply standard management involved in the major four functions of planning, organizing, leading and managing may not be sufficient to support the whole firm. It really is more concern in the management internally but instead creating competitiveness. The strategy that management team of AirAsia have developed was a blended of several proven strategies by other low priced airlines. The strategies included Ryanair's Operational Strategy which emphasis on "no frill" and landing in secondary airport terminal is a good starting place for the company. Other strategies like Southwest's People Strategy focus mainly on worker while Easyjet's Branding strategy is an outstanding idea by linking the organization with other service providers like hotels, car rentals and etc.
The second part of the interior factor of SWOT analysis is the weaknesses. The main weakness of AirAsia is that they don't have their own maintenance, repair and overhaul (MRO) service. Why AirAsia need maintenance, repair and overhaul service? It is because since AirAsia is increasing to an enormous company and they have large numbers of planes have to be serviced in order to guarantee the safety of the customer. Having less own maintenance clubs may lead some problems such as renewing deal, misunderstanding of the contact, lack communication, low quality and postponed services between others. Alternatively, they also may well not drive the same criteria and objective that drives by AirAsia and there is a risk that the confidentiality may be compromised. Thus, without a proper MRO center, it will affect the productivity and performance of the business creating a hindrance to the road of success of AirAsia.
The second weakness of AirAsia is the fact that AirAsia has received a lot of problem from customers on the service. For samples, airfare delays, being incurred for more rather than in a position to change flight or get a refund if customers cannot make it. Customers are the primary income source for an business particularly when it includes services, it is crucial that Airasia establish their priority on customers by getting the concept of "customer first". To keep a good customer service is vital when competition is getting intense nowadays. When a customer feel disappointed with the services provided to them, it could distort company brand name besides presenting a poor and undesirable image never to only an individual customer but many of them when they are being acknowledge and influent by negative feedbacks through unsatisfied customer. It is therefore significant for AirAsia to be serious on considering customer grievances and applied them to improve their services.
After researching the advantages and weaknesses of AirAsia, we should also consider the external factor of SWOT examination which is opportunities and hazards of Airasia in market.
The opportunity of AirAsia is depend on the ever-increasing engine oil price. The increase of service cost or production cost is the most unwanted result which will decrease the overall come back earning with their company. However, the increasing oil price is becoming another chance of AirAsia instead of bringing danger to the business. It is due to the fact AirAsia has been emphasized in the reduced cost strategy and being a low cost leader, although the extra cost of the increase olive oil price provides down sides to AirAsia, this result will never be a huge impact to AirAsia, its cost it's still the lowest among all the local airlines as other airline company also facing the same problem. Thus, AirAsia has a great possibility to capture some of the existing customers of full service flight and other low priced airline's customers as well. Thus, this opportunity creates a winning position for Airasia when it is a hazard for other air travel company.
Secondly, the "ASEAN Open Skies" agreement that is reached is another opportunity for AirAsia. Start Skies is an international policy concept which calls for the liberalization of regulations on international aviation industry especially commercial aviation. ASEAN Open up Skies allow endless plane tickets among ASEAN's regional air carriers starting December 2008; it allows AirAsia adding Singapore routes which includes shown to be high yielding and it is expected to deliver sustained profit. This may definitely boost the competition one of the local airlines.
Moreover, AirAsia stands at the gate of profitable opportunities, their recent improvements and planned expansions will give them a worldwide exposition. Because they venture into internet reservation and ticketless services for his or her marketing processes, they would be opened up to electronic business business solutions because of their enterprise, such as SCM, ERP, and EDI etc. Furthermore, the utilization of internet services for their services would open more opportunities for AirAsia in the process of solving network, communication, and information related problems that could be inherent in the organization.
The human population of Asian middle income is getting almost 700 million by 2010 can also creates a larger market and an enormous chance of all low cost airlines in this region including AirAsia. You can imagine that more and more people would be eager to travel by air; it could bring benefits to AirAsia, however, as well as other company.
AirAsia take benefits of lower landing fees at low priced terminal, which is also without air port lounges' charges. In addition they provide E-ticket rather than printed solution to customer which is cheaper. However, due to the certain rates like air port departure, security charges and landing charges are beyond the control of air travel operators, this is a risk to all airlines especially low priced airlines that tries to keep their cost as low as possible. For instance, Changi airport terminal in Singapore charges SGD21 for every one who departs from Singapore. That is a supplementary cost that is compulsory to pay. Different airport charges differently and this might trigger extra uncertain cost for AirAsia.
Another danger would be security of their networks. As stated above, Airasia is highly depending on the it and information system used. For instance online arranging, customer information and details retained in system may be risky when the security of the networks is susceptible. This will put the company in danger to endure the enormous damage when the information system has been destroyed. The internet is a open public domain and therefore it is susceptible to be attacked by hackers or viruses, AirAsia should be aware of these threats and also have proper ideas and control to prevent any of these to happen.
Owning to the facts that most firm are battling for survival, major players may go into targeted market section which is profitable. Additionally, Market segment's growth could draw in major competition. This will generate another threat for AirAsia. AirAsia's profit percentage is approximately 30% which in addition has already enticed many competitors. A number of the full service airlines have or likely to create an inexpensive subsidiary to contend directly with AirAsia. For example, Singapore Airlines has created a low cost carrier such as Tiger Airways which is one with their business ways of gain market value and compete with low cost flight. It is therefore vital for Airasia to keep competitive among the rival by improving their services consistently.
Users' perception that high budget airlines may bargain their protection, thus to keep costs low is another threat to AirAsia. AirAsia must have high-quality planning to be able to provide customers first-class air travel service by making sure their basic safety and comforts with a realistic price. AirAsia must aware of the market demands and policies for local territories, because economical slowdown could reduce demand for AirAsia. Local Airlines would have quick access to certain information which could help them; therefore, AirAsia must be on constant market audit, market studies and control to keep up with such competition.
In summary, Swot examination is an effective way of figuring out strengths and weaknesses, and of examining the opportunities and threats one tends to face. Carrying out an evaluation using the SWOT construction helps AirAsia to target activities into areas where one is strong and where the best opportunities lie. SWOT analysis from AirAsia is one of the major components to strengthen the business and allow them to be able to contend with the competition by possessing a firm position in low priced carrier airline industry.
In every business industry, suppliers always can be found. Electricity of the suppliers is important as it will have an impact on the industry. Suppliers source inputs to be able to produce goods or services to the customers. Inputs can be referred to raw materials, services such as experience, components, and labor which are essential to perform the firm or even to power up the company.
In the flight industry, the suppliers are quite important since there are only two major suppliers that are Airbus and Boeing. Hence there are not many selections for airline industry. Nevertheless, the global monetary problems has limited the new entrant and also lowering the update of planes in the immediate future. However, both suppliers provide almost same standard aircrafts and therefore the moving over to AirAsia is low. In addition, AirAsia placed a big amount of order from Airbus to be able to accommodate the heavy demand from the public on its affordable flights. AirAsia haven't any problem acquiring airplane from their dealer, AirBus because AirAsia is mainly an AirBus's airplanes user. Its rival, MAS whereas is mainly a Boeing's airplanes end user.
Besides the compulsory existence of suppliers, clients are also necessary available industry. It is because they are the prerequisite for the company to keep jogging. Potential buyers who are also recognizes as the stakeholders are people who demand goods and services from the company. This instructs us that buyer tends to hold bargaining vitality which pressurizes organizations. Price changes can be sensitive in the competitive market and the outcome might cause companies to lose or gain in revenue.
In our circumstance, buyers demand affordable and affordable trip price from AirAsia. Years following this airlines been contained, it successfully satisfy the buyers bargaining electricity for flights at a low fare by introducing advertising campaign such as "Mind Blowing Fair", "New Season Deal", "500, 000 Free Seats" and the latest with "Fabulous Fly-Day".
AirAsia is first to introduce "ticket-less" traveling, are almost accomplish. On this industry, buyers have no bargaining ability on price of fare like those in a morning market. Actually, they are often offered cheap fare airline flight on limited period such "Every Fri, 11am-4pm".
AirAsia followed an it (IT) similarly to other airlines which called Produce Management System (YMS). Even though this technique has affected the price tag on fare, but it is able to achieve fairness running a business to the clients and the firms. For example, a reservation done at a later date will be recharged more than the main one done previously for the same seats. That is to provide advantages in term of cheap for the customers who acquired put work in buying fares earlier. Furthermore, high demanded routes or destination tends to be more costly compare to destinations which are less active. By doing so, AirAsia can handle total chairs demanded by the clients. If price of fares will be the same overall, AirAsia would unable to earn from flights which can be less popular.
The word strength means the pressure or amount of forces being applied. Thus, this Porter's force talks about how precisely competitive are the businesses or companies in the business market. With this competitive market, many companies often fall due to their incapability to handle competitive pressure from the rivals. Those businesses will wrap up shedding more than their cost of input or eventually strive into other markets. To be able to make it through in a competitive market, organization must not get caught in dilemma when it comes to advertising, invest in research and development(R&D), innovate new yet reliable product and up as of yet with most advanced technology. It is because those efforts by least provides the organization competitive advantages in the market.
In Malaysia, there are only two main airlines companies which are functioning and dominating in the country's market, aside from other international airlines company. These are AirAsia and Malaysia Airlines (MAS). Firefly is truly a wholly owned air travel by MAS. Both these airlines have been rivals for at least ten years. Thus, it could be figured AirAsia is obtaining high power of competitive pressure from MAS. MAS have always strived to provide comfortable and reasonable fare flights to compete with AirAsia. However, AirAsia continues to be capable to withstand their pressure by giving customers with cheap fare tickets without losing the quality of their services. The primary competitive good thing about AirAsia is low priced in providing services. For example, meals during journey aren't provided which can conserve the cost to provide foods and in exchange, reducing the expense of fare. Areas in AirAsia's airplanes are fully utilized so the airplane can load more people within a flight. This enables the company to earn more and making them competent to provide cheaper fare air travel.
AirAsia through its specified system provide customers an appropriate service in booking the flights through internet and mobile. Customers can browse "mobile. airasia. com" to reserve air travel using mobile or "http://www. airasia. com" utilising the web. Their systematic online electronic solution ordering process enables those to even cope with mass reservation by the customers during night and day. The diagram clarifies how the system works and inform why the problems are stored to the minimum amount. It is a pc booking system (CRM) run by Navitaire's Open Skies technology that includes Internet, call center, and airport departure control functionality. This system has greatly assist AirAsia in attaining success. Even Tony Fernandes, CEO, AirAsia agrees: "Navitaire's Open Skies technology has truly enabled AirAsia's progress from 2 million people to 7. 7 million passengers in under two years. Start Skies scaled easily to support our development. " -
However, I would highly declare that even though AirAsia indeed is receiving competitive pressure from MAS but, the market or industry itself is not competitive as both of them have already dominate their individual market sections.
Barriers to admittance are designed to get in the way of potential and new entrants from joining market profitably and compete with the existing organizations. Capital requirements, current economic climate of scale, product differentiation, federal and legal barriers are a few of the types of barriers for a new entrant. New entrants to a small business will bring a brand new capacity and a desire to gain market share this will apply pressure on prices, costs, and the speed of investment. There is always an actual pressure for response and alteration for the prevailing players in a business when there is a new entrance. The competition in a company will be high if it is simple for others to enter to this business.
As we know the biggest hurdle for a fresh player to enter any business especially flight industry is the expense of entry. Flight industry is an enterprise that will require huge and large investment. Thus, AirAsia has a low risk of new entrants because the air travel industry is so saturated that there is barely space for a newcomer even to squash its way in. Cost of buying and leasing aircrafts, safety and security measures, customer service, research and development, high manpower and technologies causes the air travel industry to be one of the very most expensive industries in the world.
In this world of today, every key activity is carried on by specific information systems especially for business like airline industry. It is extremely costly for a small business to put into practice these information technologies systems. So, this is another hurdle for the new players to enter to certain business. For instance, Advanced Planning and Scheduling System (APS) are significant in aviation business. It really is costly for a firm to implement this system but without putting into action and employing the system, no air travel as well as AirAsia can run their business effortlessly. Air Asia requires APS system to maintain their customers' commitment because APS system is experienced in optimizing operational planning and scheduling which enable Air Asia to produce new source of cost advantages. As a result, this shows that Air Asia has a high threat of new entrants since those systems are costly to put into action.
Brand name of existing airlines and repeated fliers point are other obstacles to entry. It is very difficult to decoy consumers out of these existing favorite brands. Somehow, an airline with a solid recognition can retains old customers and lures clients even though its prices are higher. How exactly does Air Asia get it done? Information Technologies (IT) is one of the major that allows Air Asia to offer their customers in most affordable possible prices. All airlines industry competes on costs. To keep up and improve in the current market position as well as new market, AirAsia has applied the Low Cost Carrier System (LCC) to be able to continuously searching for cost advantages. AirAsia has successfully positioned their simple but strong slogan "Now Everyone Can Take flight" in their customers' head by offering least expensive possible prices. Lowest possible prices lead to increase in their income. Its net income for the next quarter closing 31 Dec 2004 was reported RM44. 4 million, a 322% increase over the previous one fourth (AirAsia, 2005). This again shows AirAsia has a higher hazard for new entrants to type in.
Threat of new swap means the availability of a product that the client can purchased as opposed to the industry's product. Quite simply, substitute product can be an alternate of products that offers by other companies which may have similar benefits or functions. Profitability of a business will be affected by the option of substitutes because customers have the choice to choose. A number of factors such as consumer turning costs, prices and quality of substitute products will determine the existence of threat in this aspect.
For local airlines, the risk of substitutes face by AirAsia might be a bit higher than international providers. Substitutes for flights to the desired location in a local country include coach, car or bus yet time, money, personal choices and convenience will deciding one's decision. Although airlines travel perhaps a just a bit expensive than by bus or car, enough time taken is much faster. Since AirAsia has implemented LOW PRICED Carrier System which can offers customers in least expensive possible price has lead to the majority of the customers move to AirAsia as the turning costs is low.
AirAsia faced a low risk substitutes for international providers since there's a low threat of new entrants. Besides, the majority of the clients choose to visit by air since touring through air save times. However, in the worldwide market, AirAsia still needs to contend with many existing players such as Cathay Pacific and Japan Airlines. Nevertheless, AirAsia builds and keeps its competitive advantages by offering services at a cost that is basically lesser than challengers' prices. Far beyond AirAsia is among the most first airline that executed "ticketless" travelling among its opponents by using computer reservations system. Computer reservation system is a programmed and computerized system which used to store and retrieves information and perform business deal associated to flights. This helped AirAsia to execute operation effectively and efficiently.
In todays globalize economy, it (IT) has powered fundamental changes in the nature and program of technology running a business. Cross-functional system is the 3rd time of information system, coming after calculation system and efficient system. What exactly is the goal of the machine? What benefits will organizations obtain after putting into action the machine? These questions are so frequently asked that some companies even gave up on performing the cross-functional system as it will involve coordinating activities across multiple departments and require workers to comprehensively change the way they used to work.
However, cross-functional system will be extremely beneficial if it is applied the right way. A successful software of cross-functional systems is dependent on two factors, people issues and scientific issues. People issues include corporate culture, work items and specific decision designers. The important factor in corporate ethnicities and work items is without doubt cooperation, only by working together managers are able to talk about information through the machine. For useful decision making, ineffective or inappropriate information in cross-functional systems must also be avoided. Technological issues on the other hands, include information system (IS) elements. Management must compare the benefits of using information system elements such as inputs, processors and outputs with the expenses involved.
There are plenty of instances regarding cross-functional system, but Supply String Management (SCM), Venture Resource Planning (ERP), and Customer Marriage Management (CRM) will be the 3 types of enterprise system heading to be reviewed.
Supply Chain Management (SCM) is the current trend in the majority of the organization, where SCM is define as a couple of synchronized decisions and activities utilized to successfully integrate suppliers, warehouses, transporters, sellers, and customers so that the right product or services is sent out at the right quantities, to the right location with the right time in order to satisfy customers popular and reduce any pointless cost occurred. SCM core aim is to boost customer service through the elimination of waste from the machine in every types of form including thrown away time. Having the ability to eliminated thrown away time allows the coordination of business processes to be speeded up.
Commonly, supply string contains three moves that organizations need to take into consideration. First is the materials movement, where all physical products like the end-products, raw materials etc flow over the chain. Information move consist of all types of data including demand, resource shipment, orders and all sort of information that are needed in the supply chain. Finally is financial stream, involving all copy of money, payment and credit related data which is essential in the resource chain.
On the other hands, a company's resource chain is complicated because it might entail hundreds and even a large number of customers and suppliers. There are issues scheduled to uncertainties illustrations weather, prices and even competition is with the capacity of disrupting the source chain. Nevertheless, many companies still decides to take up the chance of utilizing SCM because the system provides huge return if it is put into procedure accurately.
Air Asia no doubt is another fan of SCM, and the IT execution is identifiable as Advanced Planning and Arranging also known as APS. What role will APS play?
Mainly, APS concentrates more on interior operational processes whereby reduced cost in inbound logistics and operation activities would be the direct result after the execution of APS. Why don't we not forget that airline industry's operational environment is extremely complicated, thus in order to be successful in virtually any airline, functional planning and arranging plays a substantial role.
Air Asia has fundamentally realized this theory and acquired ERP introduced to their system. However, depending on ERP is impossible to place Air Asia into the safe place in the sense of interior operational operations. ERP system executed by Air Asia is not totally efficient, flexible and intelligent when it comes to analyzing all types of data.
However, with the existence of APS, it definitely optimizes Air Asia supply chain management. APS functions as the brain in the resource chain activities where the system gears activities related to customers and suppliers requirements. The system is capable of clustering and classifying data in relation to customers and suppliers, APS is even able to set purchases priorities. APS system without doubt provides cost advantages to Air Asia as it improves the company's tactical and functional performance, specifically inbound and operational activities.
Now, there are specifically four new functions that APS provides to Air Asia. The machine increases the company's performance and permits Air Asia to add more point of view as the system provides a lot of convenience.
The first function is the event management technology. This feature of APS system provides Air Asia a aiding hand in analyzing supplier's performance and streamlining the monitoring process. Suppliers will be assessed in a fair manner as Air Asia can identify those who find themselves effective and successful in terms of supplying goods and services.
Supplier portals will be the second function wanted to Air Asia through APS system. The role played is to provide information hub for airlines and suppliers to prevent error from developing during functional activities such as order control.
APS system provides inventory planning, demand forecasting, and maintenance management functions. All these function is extremely useful as it allows airlines and airplane producer and related suppliers to obtain cooperation strategy in controlling inventory and maintenance program. Since Air Asia utilizes its plane fleet more regularly than standard airlines, aircraft maintenance is even more significant.
Lastly, Air Asia is with the capacity of conducting research in terms of planning effective routes to save cost and time. Way profitability analysis is the feature that acts such goal. This analysis allows Air Asia to perform comparability on the routes considered and formulate your final smart decision. A removal of 1 loss-making road will drastically improve the company's overall profitability.
Customer Marriage Management (CRM) is the next interest of it (IT) supplier community and professionals since the past ten years. CRM is a common term around large corporation as they seek to preserve as much customer as it can be. Basically, CRM is a thorough strategy and process of acquiring, retaining, and partnering with selective customer to create superior value for company and the client. With out a question, CRM is trying to accomplish customer retention by utilizing a variety of after-marketing practices that lead to customer bonding before and after a sale made. Well, what exactly are the actual advantages from employing CRM?
All company comprehends that establishing and strengthening long term interactions with customer is the main element to success. CRM is significant to go after mutual advantage among customers and sellers. However, numerous companies view CRM as a few data in their computer, boring churning of words and will be offering for "lucky" customers who use their service regularly. Airline business entails real people with feelings and travelers are especially looking for attention. If CRM is properly applied and used, customers can enjoy personal treatment, together with appropriate advice on getting the best out of their purchase. On the other hand, companies have the ability to improve retention and boost the amount of devoted customers. To be a matter of the fact, CRM really helps to simplifying the sales functions and helping sales staff to close offer faster.
"The main thing about great customer support is ensuring that the customer comes with an opportunity to consult with you" said Tony Fernandes, Group CEO of Air Asia. This demonstrates he strongly is convinced that CRM is a very useful tool if handled well. In March 2009, Air Asia has developed a fresh CRM, where the system is capable of scrutinize all customers information and gain an information of customer's needs and behaviors. The company will proceed to improve customer's working with the company. Air Asia experienced put tons of work in it just to meet as much customer as possible.
In conditions of going and planning, Air Asia's formal website have been personalized in a manner that enables customers to make travel plan through online, Air Asia provide travel vacation spot, hotel, transport, environment and suggestions for customers before decision making.
As for reservation and ticketing, Air Asia provides plenty of convenience through kiosks, internet check-in and even roving agent check-in. Customers have the ability to perform such action in all places rather than queuing up in the counter-top which is frustrating and troublesome. The company even delivers e-mails and SMS to customers to suggest the destination of interest with travel guide included.
Air Asia provides great convenience as well in terms of customers caution. Online baggage service is provided as Air Asia understands that baggage not arriving with customer at their destination is tremendously inconvenient. Web-based self applied service such as e-ticket arranging and reservation is another advantage. Customers might worry of their credit/debit card amount exposure or hacked, thus Air Asia has registered with ecommerce repayment company, PayPal. All transactions and airfares can be processed through PayPal and their financial details are extremely secure now.
Lastly, Air Asia is particularly successful when it comes to campaign management. The idea of attraction is without doubt the company changing in to the world's best low-cost flight in '09 2009 and 2010. Air Asia campaigns and provides campaign by e-mailing customers. Outbound e-mails are mailed to see customers of the latest improvements about the company.
CRM carried out by Air Asia is actually customer-centric and allows them to stand a better chance in acquiring, growing and keeping customers. CRM is a powerful competitive tool, adding to much better success of both Air Asia and their customer.
The last Cross-functional system street to redemption to Enterprise Reference Planning (ERP), the key purpose of ERP is to provide a single information system for company of key business functions. All information which were once scattered all around will be arrange neatly and is capable to flow flawlessly throughout the business including accounting, real human source of information and other departments.
There are numerous benefits obtain through ERP, a successful execution of ERP systems is extremely advantageous in terms of proper planning and management control. For instance, the machine provides cost reduction in areas such as inventory control cost, development costs and marketing costs. Since business functions across departments are integrate onto a single enterprise-wide information system, thus coordination across efficient departments will be improve.
Air Asia realizes the benefits from ERP, and did not waste any time implementing it. In May 2005, Air Asia carried out a full-fledged ERP system by Avanade counsultant. Avanade is the business enterprise spouse of Microsoft. This built-in ERP system is run by Microsoft Business Solution, a. k. a MBS. It really is purely predicated on Microsoft technology. Avanade selects from a wide variety of services predicated on the innovative Microsoft solutions and current industry requirements.
Based on the definition, ERP is the system that integrated extensive software to make the IT system is more effectively and successfully. By implementing this system Air Asia is seeking to successfully maintain process integrity, reduce financial month-end final control times, and speed up reporting and data retrieval processes. Furthermore, it is a system focusing on taking transactions in daily operations and assisting Air Asia to save its operational costs as well concerning raise the efficiency and integrity in its procedure.
As a result, the system that Air Asia carried out by using technique to maximized the IT system can be a great strategy to make Air Asia far better by lowering cost and eliminated inefficiency.
While it is true that AirAsia is an extremely successful low priced carrier, it offers given many people the chance to have a much better transportation experience where it give the main benefits associated with efficiency and cost decrease to customers. This task has been analyzed for the nature of AirAsia by the way of using SWOT research and PORTER'S FIVE FORCES. It also shows so how exactly does the business utilizes IT and it is in order to let the company to perform smoothly and efficiently.
From the perspective of SWOT evaluation, it is obviously we know that AirAsia is very strength in the method it uses to lessen its cost. AirAsia has a great deal of strategies in order to enhance its rivalry among other airlines in respect of giving the reduced cost mentality amongst their workforce, providing 'no frill' notion, utilization of IT and formulating good management strategy. AirAsia has a great deal of opportunities in terms of 'ever-increasing engine oil price', 'ASEAN Start Skies' agreement, increasing population in Asia and exposed to electronic commerce business. Inside the SWOT evaluation, we can also easily find the weaknesses and dangers that AirAsia has been facing. To be able to increase the amount of rivalry amongst their rivals AirAsia should give attention to these aspects and formulating good answers to enhance their business performance.
From the view of Porter's Five Causes, it includes five areas that happen to be power of provider, power of buyers, intensity of competitive rivalry, threat of new entrances and last but not least risk of new substitutes. The success of AirAsia is seen from the area of the power of customers. The bargaining ability of potential buyers for AirAsia is quite low as customers usually demand realistic and affordable airfare price from AirAsia compared to other airlines. AirAsia done a whole lot of special offers and events to be able to directly compete with competitors, it influences many customers to obtain lower incentive to buy other airline with a more expensive flight price. AirAsia, however, facing a higher intensity of fighting with MAS, still can profitable incidentally of minimizing its cost and providing a comfortable service in scheduling the plane tickets through internet and mobile. AirAsia has a low threat of new entrants because the airline industry is so saturated that there surely is very hard for newcomers to squeeze its way in. However, Air Asia use APS system to keep their customers' loyalty, it is costly to do so and producing high risk of new entrants. The next possible threat for AirAsia is its net profit is high. The threat of new replacement is quite low for AirAsia since it is cheap and save time to travel by air.
AirAsia's success factor can be added largely by the way it implements Resource String Management (SCM), Venture Resource Planning (ERP), and Customer Marriage Management (CRM). The function of each system provides cost advantages to Air Asia as it improves the company's proper and operational performance, especially inbound and operational activities.
The information technology integrated by AirAsia is Advanced Planning and Arranging also known as APS. Through the use of APM, it can enhance the issue that tied to the conventional ERP system as ERP will not provide flexibility and analyze data for better resource string management. APM may bring benefits to AirAsia in the way of easily analyzing supplier's performance, provide information hub for airlines and suppliers, conserving cost and time and also collaborating strategy in handling inventory and maintenance routine. Alternatively, customer marriage management (CRM) also provides significant benefits to AirAsia. It provides certain customized website to convenient the customers from giving a lot of rules and suggestions, of course, the fantastic success also dependent on the advertising campaign management which appeals to the customers by giving attractive promotion and through the e-mail. Last but not least, the entire utilize of ERP system provides cost decrease in areas such as inventory control cost, creation costs and marketing costs. It retains process integrity, reduce financial month-end final control times, and speed up reporting and data retrieval operations.